Government-Backed Income Opportunity

President Obama has given us our next mega income opportunity. Whether you are an Obama loyalist, a Tea Partier or anything in between, it’s clear the next major issue – besides possibly energy – will be education.

Even with massive increases in education spending over the last several years, comprehension and retention rates are falling flat. According to the Department of Education, reading levels have not improved one iota among 17-year-olds since it started keeping track of them in 1971. Yet we’re paying twice as much on an inflation-adjusted basis.

Meanwhile, education levels in our G-8 colleagues’ countries are at the same levels, and many are even higher. Yet they aren’t spending nearly as much per student as the US.

Of course, just because the stats don’t line up with spending here in the US, it doesn’t mean we’ll see any less spending going forward. In fact, the more involved the federal government gets with education, the more money we’ll see thrown at it.

Local and state governments still make up the majority of education budgets. And they’ve both been uniformly cash tight since the economic collapse started in 2008. But education is the one department they aren’t looking to cut. Instead, they are just moving money around.

One department making out even in this environment is educational technology. Each year, the number of students per computer goes down. Eventually, we could see more classrooms with a one-student-to-one-computer ratio. Meanwhile, the software continues to improve at fascinating rates.

Jim Nelson
for The Daily Reckoning